Question
Hickory Company manufactures two products14,000 units of Product Y and 6,000 units of Product Z. The company uses a plantwide overhead rate based on direct
Hickory Company manufactures two products14,000 units of Product Y and 6,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y and Z:
| Activity Cost Pool | Activity Measure | Estimated Overhead Cost | Expected Activity | ||
| Machining | Machine-hours | $ | 209,000 | 10,000 | MHs |
| Machine setups | Number of setups | $ | 171,100 | 290 | setups |
| Production design | Number of products | $ | 93,000 | 2 | products |
| General factory | Direct labor-hours | $ | 259,000 | 12,000 | DLHs |
|
| |||||
| Activity Measure | Product Y | Product Z |
| Machine-hours | 7,900 | 2,100 |
| Number of setups | 50 | 240 |
| Number of products | 1 | 1 |
| Direct labor-hours | 8,900 | 3,100 |
|
*Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z? (Do not round intermediate calculations and round your final answer to the nearest dollar amount.)
| ||
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Apple Blossom Cologne Company Audit Case
Authors: Jack Paul
5th Edition
0072844507, 978-0072844504
